Strategic Collaboration in the Third Sector

Strategic Collaboration in the Third Sector

'Mergers' in the Third Sector are one example, maybe the most
obvious example, of strategic collaboration. They can be friendly,
positive, and an ideal platform for growth, but there is sometimes
a perception that they imply failure by one organisation and a
subsequent hostile takeover by another. Both can be true, but often
the negative perception prevails. Our arguments in their favour are
not new, but when some charities and social enterprises are
struggling, and greater collaboration can be a very sensible
option, they are worth making again. As with most strategies, the
secret lies in implementation.

Age UK came about when two quite different charities that both
worked with older people, Age Concern and Help the Aged, merged
five years ago. The resultant structure is complex. The national
charity campaigns, raises funds and sells commercial services such
as insurance; whereas local Age UK's offer services (from
assistance at home to day care centres) whilst providing
information and advice. These local charities sign up as
independent brand partners; they are not owned by the national
charity. They have their own employees, trustees and volunteers.
AgeUKcharity shops are sometimes locally owned and sometimes
nationally owned. Maximising the benefits for all involved from
this form of collaboration is no easy task.

Comic Relief (with Sports Relief), helped by celebrity
supporters and television exposure, has become a very powerful
charity, able to award around £75 million in grants every year.
Grants typically go to other charities, who apply against strictly
defined priorities and guidelines. But Comic Relief has also found
it beneficial to partner with other charities who, in effect, act
as outsource agencies to disperse funds for it. Some Community
Foundations, with detailed insight into local needs, have benefited
from this type of collaboration. Such partnering is a win-win
strategy.

In today's turbulent and uncertain world, where only the fittest
thrive, we at Anglia Ruskin believe collaboration is a strategic
option the Third Sector must take seriously - it is as much a
potential growth opportunity as it is about survival. The new and
entrepreneurial charity, Help the Heroes, has grown rapidly in the
last few years to become the third largest in its sector. Some
commentators think the leading two, the British Legion and SSAFA,
could now benefit from merging their resources to become leaner,
more proactive and more dynamic.

Collaborations can help create critical mass and thus save
costs, pool experience and improve reach and competitiveness. Some
contracting organisations do not believe small social enterprises
are sufficiently robust and prefer to deal with larger businesses,
for example. In a larger organisation staff can specialise more and
develop real expertise. And there is increased potential for
greater visibility. At the same time, though, some jobs might be
lost. Managers and trustees, then, have good reason to be wary of
getting collaboration wrong.

The Co-op Bank, high profile because of its ethical banking
stance, acquired the Britannia Building Society in 2009, but this
led to hidden capital exposure problems; a subsequent plan to buy a
number of high street branches from Lloyds Bank had to be abandoned
in 2013. When this was coupled with corporate governance and
leadership issues (with these partly linked to the size and
complexity of the business) the partial breaking up of the diverse
Co-op Group (with its small supermarkets, pharmacies and funeral
homes as well as the bank) became a distinct possibility.

It is also clear that promised improvements do not always come
about, or happen quickly enough to deliver the expected return.
Implementation problems are to some extent understandable. Much
that ideally needs to be known cannot be known until after a merger
has gone through. Activities and financial details should be clear;
but the real power battles and cultural differences only emerge
later - and they are key deciding factors in the ultimate outcome.
Charity leaders and trustees may simply not agree on the best way
forward; our research in the East of England confirms that some
trustees feel they are abandoning the original charity if they
agree to its merger with another, even though the benefits are
potentially significant. Emotional ties to the past can be a
barrier, as can the need for due diligence and the potential costs
of essential professional expertise.

In the end, the decision will depend on people and their
judgement. Being clear on the situational realities, establishing
realistic priorities and keeping an open mind on both options and
opportunities - in other words, wearing a strategic hat and
blending logic with passion - are major challenges for many in the
Third Sector. It is tricky but important - and it
matters.

Disclaimer: SEEE may not share all the views detailed in this
blog.

John Thompsonis Professor of Social Entrepreneurship
atAngliaRuskinUniversity, where he works with the Third Sector
Futures Group. He has written a number of books and papers on both
strategy and entrepreneurship; and he received the Queen's Award
for Enterprise Promotion in 2009. He has also been a Visiting
Professor inAustralia,New ZealandandFinland.